Bitcoin Mining Council Releases Q3 Findings – Consumption, Efficiency, Sustainability

For some time now, there has been a growing movement against Bitcoin’s Proof-of-Work (PoW) consensus mechanism, led by some of the most prominent environmentalists. To much displeasure of Bitcoin miners, the governments globally are also reacting negatively by proposing bills to ban it due to the industry’s energy-intensive operations and overall unsuitability for the climate.

Now, how true this narrative is of the PoW consensus mechanism being a so-called “energy guzzler” is up for discussion. For instance, the recent report released by the Bitcoin Mining Council (BMC) shows that Bitcoin miners are currently utilizing electricity with a 67.8% sustainable power mix.

Moreover, it is now estimated that the global bitcoin mining industry’s sustainable electricity mix is 59.4% after increasing approximately 3% year-on-year, making it one of the most sustainable industries globally.

So, what is Bitcoin Mining Council? Well, BMC is a voluntary global open forum of Bitcoin mining companies and other entities in the industry committed to the Bitcoin network. The forum is focused on promoting transparency, sharing best practices, and educating the public on the benefits of Bitcoin and Bitcoin mining.

Founded in May 2021 with support from some of the largest Bitcoin mining companies and MicroStrategy’s Michael Saylor, this is the sixth quarterly release of important industry data by the BMC. The latest survey conducted by BMC focused on electricity consumption, technological efficiency, and sustainable power mix in Bitcoin mining. So, let’s look at some more statistics from the report.

Much like sustainability, the global Bitcoin Network’s technological efficiency is also expected to have grown 23% YoY, from 17.7 EH per gigawatt (GW) in Q3 2021 to 21.7 EH per GW in Q3 2022. This jump in efficiency also reaffirms the fact that as the Bitcoin Network continues to grow, it will become even more efficient over time.

Meanwhile, amidst the ongoing bear mining, Bitcoin mining hashrate surged 73% YoY in Q3 2022, according to the report.

“With a hashrate approaching 267 EH, Bitcoin represents 99% of all crypto power, offering 100 times the security of all the other crypto networks combined,” said Saylor.

As per the survey findings, the hashrate of BMC membership companies increased from 35 EH at its inception to 105 EH in Q3 2022.

Interestingly, BMC members control a significant portion of the global Bitcoin Mining Network. Statistically speaking, BMC now represents 45.4% of the global Bitcoin Mining Network, with members spread across five continents.

“YoY, Bitcoin security increased by 73%, and mining efficiency increased by 23%. The bitcoin network has never been stronger,” stated Ben Gagnon, Chief Mining Officer of Bitfarms.

The US Calls for Greener Alternatives

In the crypto sector, Bitcoin is the most popular and predominant name among PoW mechanism users, which is used to validate transactions and add new blocks to the chain by solving complex, arbitrary mathematical puzzles in order to prevent anyone from gaming the system.

However, recently, many have been pushing against this mechanism. For instance, a few months back, the New York State Senate passed a bill barring new mining operations powered by carbon-based energy sources for two years. That said, existing mining firms or ones currently undergoing the permit renewal process would still be allowed to continue their operations.

This two-year moratorium is imposed on new PoW mining projects powered by carbon-based fuel in New York. If you are wondering why the state is so popular among crypto mining firms, it has long been the go-to destination among Bitcoin miners thanks to its cheap hydroelectric energy sources. However, in recent years, New York-based mining firms also repurposed defunct coal power generation facilities.

Interestingly, the state will conduct a study on the potential environmental impact of PoW mining. On top of that, the Senate also passed a bill separately that would create a “cryptocurrency and blockchain study task force.”

On a federal level, the White House has criticized PoW mining and urges crypto miners to explore greener alternatives. In the report released last month, the White House called for the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to adopt tangible actions to curb power use for Proof-of-Work cryptocurrency mining.

Moreover, through the report, the Biden administration also called for broad policies that aim to cut greenhouse gas emissions and get crypto mining companies to use clean energy – as well as implement tighter measures should those efforts fail to yield desired results.

It also suggested that lawmakers and policymakers in the United States should consider legal restrictions or a total ban on it to mitigate the sector’s environmental impacts, should other strategies not take hold.

So, why is the Committee specifically red-flagging PoW technology? It’s because the committee fears that such PoW crypto mining operations will hamper the Committee’s goals for reducing U.S. greenhouse gas (GHG) pollution by 50% below 2005 levels by 2030 and reaching net-zero GHG pollution by no later than 2050.

While the White House is not explicitly proposing a total ban on PoW mining in the United States, it is making a nod toward China’s ban as an environmental benefit and also flagging the EU’s implementation of minimum sustainability standards required of this mechanism.

Dealing with Energy Crisis

A proposed de facto ban on PoW crypto mining was part of the significant EU draft law, the Markets in Cryptoassets Act (MiCA), introduced in 2020, which seeks to strengthen regulations surrounding bitcoin and cryptocurrencies, creating a more detailed and simplified regulatory framework throughout the EU.

As expected, the draft proposal on PoW restrictions received a negative reaction from the crypto community.  However, bitcoin enthusiasts breathed a sigh of relief when in March this year, members of the European Parliament’s Economic and Monetary Affairs Committee voted to reject the version of a bill that would have effectively banned PoW-based cryptocurrency in the EU. But it has established new draft rules that would protect consumers and make mining more sustainable.

Yet, regulators and government officials throughout Europe have been calling for the ban of PoW mining, pointing to the significant electrical energy needed in such operations.

It goes without saying that a ban on PoW mining would leave the EU behind while other jurisdictions seek to promote innovation. Moreover, banning cryptocurrency mining from Europe would have been ineffective at reducing the global footprint of PoW protocols anyway since miners would have simply moved elsewhere.

Ultimately, banning mining in Europe would lead only to short, temporary reductions in global hash rates. A hard ban on Proof-of-Work or an improper limit would, at best, be counterproductive.  At worst, it would be impossible since POW networks are decentralized by design.

A ban on, or inappropriate restrictions of, PoW would significantly affect European digital competitiveness at a time when Europe has a significant distance to travel in the mining of cryptocurrencies.

As such, the main EU administrative authority, the European Commission, has asked to submit a legislative proposal to include in the EU’s taxonomy for sustainable finance any activity related to the mining of cryptocurrencies before January 1, 2025.  However, with Europe currently dealing with the energy crisis, European policymakers are yet again warning about the shutdown of Bitcoin miners.

“In case there is a need for load shedding in the electricity systems, the [EU] member states must also be ready to stop crypto-assets mining,” the commission said in a document published this week.

The commission also mentioned “an energy-efficiency label for blockchains” along with putting an end to tax breaks and fiscal measures benefitting crypto miners in certain member states.

According to the commission, crypto’s energy consumption has increased 900% over five years, reaching around 0.4% of worldwide electricity use, adding that Europe represents 10% of global PoW mining.

The commission promised another report on the topic by 2025 that could recommend further measures to cut crypto’s energy use.